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The Indian Railways may not be the railways we know, any more. Taking advantage of several favourable circumstances the government is creating a new railway system parallel to the existing one. The investment in the new group of entities is already more than twice the investment in rail tracks, new passenger and freight trains that the generic rail budget presented in Parliament contains. Even the management of the new railways has moved out of Rail Bhawan.
This is the most riveting change to have occurred in India's largest infrastructure network. It has happened without any announcements within the past two years, though some of it began a bit earlier and it could be executed as the railways and the public at large have remained fixated on the rapid churn of ministers at the top.
Within the debris of the development plans for most of the infrastructure sector like roads, power, urban reforms including water, this is one which has surprisingly begun to sail through.
Successive rail ministers, with the brief exception of Dinesh Trivedi, have blocked any attempt to make the railways a corporate entity. They have used every possible reason to scuttle the moves despite pulling the railways closer to a financial emergency.
For instance, for FY14, the railways will borrow R14,000 crore from the markets through its financial arm the Indian Railway Finance Corporation. This is more than a third of its investment budget. The costs for the borrowing are kept low since the railways, through a book entry, hypothecates its rolling stock to the corporation. But in the process, more than 80% of the stock has got pledged which means the headroom is almost gone for additional borrowing in future.
Let us now examine the changes being brought in to solve this mega mess. The biggest of these is the central government clearance for two mega projects the Western dedicated freight corridor and more recently the eastern corridor, both under the Dedicated Freight Corridor Corporation of India Limited (DFCCIL).
As envisaged, the
DFCCIL is the biggest corporatisation story of the Indian railways. It will set up rail lines between